Exec at Berkshire Unit May Face SEC Action
Billionaire investor Warren E. Buffett’s Berkshire Hathaway Inc. said Friday that the Securities and Exchange Commission was considering civil penalties against an executive at one of its insurance companies.
The news came when Berkshire released its first-quarter earnings after the close of Friday’s stock trading. The Omaha-based company said profit fell 12% in the first quarter, hurt by a hefty loss on investments.
Berkshire said civil penalties were being considered by the SEC against a senior vice president at subsidiary General Reinsurance Corp. over alleged violations of securities laws. Berkshire did not name the executive who received the so-called Wells notice Monday.
General Reinsurance has been under federal investigation over some of its reinsurance transactions with Virginia-based Reciprocal of America, a former liability insurer of doctors, hospitals and lawyers, and New York-based insurance company American International Group Inc. In one transaction, AIG has acknowledged that its accounting for a General Reinsurance deal was improper.
Berkshire said executives at General Reinsurance and Berkshire have cooperated fully with investigators from the SEC, the Justice Department and the attorneys general of New York and Virginia.
Buffett answered questions about the probe in New York on April 11, but regulators have said he was not a target of the investigation.
For the three months ended March 31, Berkshire’s net income fell to $1.36 billion from $1.55 billion a year earlier. Revenue rose 3% to $17.63 billion.
The results included losses of $384 million from its investments in the latest quarter, contrasted with a gain of $156 million the year before. About $307 million of the investment loss was from currency trading when the dollar grew stronger over the quarter, Berkshire said.
The company also said Friday that General Reinsurance Australia was being investigated by the Australian Prudential Regulation Authority.
In addition, Britain’s Financial Services Authority told General Reinsurance on April 15 that it was investigating an officer of General Re affiliate Faraday Group, and a former officer of another General Re affiliate, Cologne Reinsurance Co. Limited of Dublin.
Shares of Berkshire fell $200.10 to $83,999.90 on the New York Stock Exchange.
